The day South Africans stop working for the government

South Africa has hit its ‘Tax Freedom Day’ on Friday (16 May), marking the first day of the year that the nation as a whole has theoretically earned enough income to pay its collective taxes.

The day has been marked by the Free Market Foundation (FMF) since 1997 to shine a light on the tax burden shouldered by ordinary taxpayers.

The group said that every income-earner in the country is taxed—whether through income tax, VAT, fuel levies or other charges—and for part of the year, South Africans are effectively working to fund the state.

Tax Freedom Day on 16 May means that the average South African has laboured 136 days – over a third of the year – to fund government spending.

The day is calculated by dividing General Government Revenue by GDP at market prices, then multiplying the result by the number of days in a year.

The final step is adding a day to bring you to the first day on which you are done paying tax.

Tax Freedom Day is determined in this way and spread over the first months of the calendar year to give us an idea of how the burden of taxes affects the average taxpayer.

“Over the past 30 years, the actual Tax Freedom Day has been trending ever later in the year – and making most people poorer,” the FMF said.

In 1994, the day that South Africans had theoretically earned enough income to cover the tax burden for the year was 12 April.

By 2025, this is now almost five weeks later.

“Taxpayers need to work almost five extra weeks to pay for government expenditure in 2025 than they did 30 years ago,” the FMF said.

“Today government salaries alone consume more of our work than the entire state budget did in 1994.”

According to FMF Senior Associate Prof Richard J Grant of Cumberland University, Tennessee, South Africa’s tax burden has climbed to nearly 37% of GDP.

It is worth noting that the calculation doesn’t include state-owned enterprises like Eskom. If SOEs were included in the calculation, the date would be pushed out by about another month.

South Africans are heavily taxed and get nothing for it

South Africans carry one of the highest tax burdens in the world, and often have nothing to show for it.

The progressive tax system sees higher income earners paying a greater share of tax, while all citizens carry an additional tax burden through VAT, fuel levies and other taxe (sugar tax, carbon tax, sin tax, etc).

Citizens are then strapped with other ‘indirect’ taxes as a result of government’s service delivery failures, often needing to turn to private healthcare, private security and private education to make up for these.

Increasingly, this has progressed to sourcing private energy generation and water sources, as these services have also crumbled.

One way to measure how much taxpayers lose to government inefficiency and ineptitude is to look at the country’s fiscal multiplier.

A fiscal multiplier is an economic representation of how much economic growth is delivered through government spending.

If the multiplier is above one (1x), government spending is at least resulting in nominal GDP growth.

If the multiplier is below one, it means a government is spending more than it is eventually getting out.

South Africa’s fiscal multiplier is below one. In simple terms, this means that each rand the government spends results in less than one rand’s worth of additional national income.

Put even simpler: the government wastes the money it gets.

Economist Dawie Roodt previously noted that this means that paying more tax, or equipping the South African Revenue Service (SARS) to collect more tax, will likely just lead to more waste.

He said that the government spends a lot of money on big-ticket items like health and education, but has very little to show for it.

South Africa’s healthcare system is in crisis, and the state’s solution is to throw even more money at it through the NHI, at the expense of the private sector.

Education is the highest budget item, yet South Africa has some of the poorest quality education in the world, often ranking among the lowest, if not the lowest, in various international tests.

South African taxpayers will again face increased taxes in the coming week as National Treasury tables it third budget on 21 May.

After finance minister Enoch Godongwana failed to pass a VAT hike to fund government’s increased spending, economists say he will likely tap into other tax sources to cover as much of the shortfall as possible.